Writing in Slate, Jeff Segal suggests that legalizing pot could alleviate California’s budget shortfall. Once you get past the inevitable Michael Phelps reference and a few awful puns (California’s “chronic” fiscal pain? Really guys? Was “Allow us to make a blunt suggestion” too subtle?) it actually comes off as a pretty sensible idea, which brings to mind this article from Reason on the end of Prohibition:
What happened in 1930 that suddenly gave the repeal movement political muscle? The answer is the Great Depression and the ravages that it inflicted on federal income-tax revenues.
Despite pleas throughout the 1920s by journalist H.L. Mencken and a tiny handful of other sensible people to end Prohibition, Congress gave no hint that it would repeal this folly. Prohibition appeared to be here to stay — until income-tax revenues nose-dived in the early 1930s.
From 1930 to 1931, income-tax revenues fell by 15 percent.
In 1932 they fell another 37 percent; 1932 income-tax revenues were 46 percent lower than just two years earlier. And by 1933 they were fully 60 percent lower than in 1930.
With no end of the Depression in sight, Washington got anxious for a substitute source of revenue.
That source was liquor sales.
UPDATE: This report, from Latin America, also seems relevant.
UPDATE II: Here’s Reason on our new drug czar.